What Deposit Do I Need for a Mortgage?

One of the first—and most common—questions people ask when thinking about buying a home is:
“How much deposit do I need for a mortgage?”

Whether you’re a first-time buyer, moving home, or looking to invest in property, understanding how deposits work is key to getting mortgage-ready. In this blog, we’ll explain how much deposit you typically need in the UK, how it affects your mortgage, and what options are available if you’re working with a smaller deposit.

Let’s break it down in simple terms, without the jargon.

What is a mortgage deposit?

A mortgage deposit is the chunk of money you put towards buying a property, with the rest usually covered by a mortgage loan from a lender.

For example, if you’re buying a £250,000 house and you put down a £25,000 deposit, you’ll need a mortgage of £225,000. That means you’ve put down a 10% deposit, and you’re borrowing the remaining 90% from the lender.

What’s the minimum deposit for a mortgage in the UK?

In most cases, the minimum deposit you’ll need is 5% of the property’s value. This means if you’re buying a home worth £200,000, you’d need at least £10,000 as a deposit. This is known as a 95% loan-to-value mortgage (or 95% LTV for short).

Some lenders may ask for more, especially if:

• You’re self-employed or have a more complex income
• Your credit history isn’t perfect
• You’re buying a non-standard property

But as a general rule, 5% is the starting point for many first-time buyers and home movers.

How much deposit do most people put down?

While 5% deposit mortgages are available, most people try to save more if they can. Here’s why:

Generally, the bigger your deposit, the better your mortgage deal. That’s because lenders see you as lower risk, which means lower interest rates and monthly payments.

What if I don’t have a big deposit?

If you’re struggling to save a large deposit, don’t panic. There are several ways to boost your chances of getting on the ladder:

🏡 Government Schemes

There are government-backed mortgage schemes designed to help buyers with smaller deposits, including:

• First Homes Scheme – Aimed at local first-time buyers and key workers
• Shared Ownership – Buy a share of a property and pay rent on the rest
• Deposit Unlock – Offers 5% deposit mortgages on new-build homes

These schemes vary in terms of eligibility, so it’s worth speaking to a mortgage advisor to see which one fits your situation.

Does my deposit affect my mortgage rate?

Yes, absolutely. The size of your deposit has a direct impact on the mortgage interest rate you’ll be offered.

• Smaller deposit = higher risk for the lender, which usually means higher rates
• Larger deposit = lower risk, which means better rates and lower monthly payments

That’s why, if you can, it’s worth trying to save a little more—even increasing your deposit from 5% to 10% can make a big difference.

How to save for a mortgage deposit faster

Saving for a home deposit can feel overwhelming, especially with rising living costs. But small changes can add up over time. Here are a few tips:

• Use a Lifetime ISA (LISA)* – If you’re aged 18–39, you can save up to £4,000 a year and get a 25% government bonus (up to £1,000 per year) towards your first home.
• Track your spending – Cutting out unused subscriptions or eating out less could free up hundreds per month.
• Set up a standing order – Automate your savings so a fixed amount goes into your deposit pot as soon as you’re paid.

* You will incur a lifetime ISA government withdrawal charge (currently 25%) if you transfer the funds to a different ISA or withdraw the funds before age 60 and you may therefore get back less than you paid into a lifetime ISA.

By saving in a lifetime ISA instead of enrolling in, or contributing to an auto-enrolment pension scheme, occupational pension scheme, or personal pension scheme:
(i) you may lose the benefit of contributions from your employer (if any) to that scheme; and
(ii) your current and future entitlement to means tested benefits (if any) may be affected.

Can I get a mortgage with gifted deposit money?

Yes, many lenders accept gifted deposits from family members (typically parents or grandparents). The key is that the money must be a gift, not a loan, and the person giving it must confirm that in writing.

This is a common route for first-time buyers who are receiving help from the ‘Bank of Mum and Dad.’

Should I wait to save more or buy with a smaller deposit?

This depends on your personal situation and the property market. If house prices are rising faster than you can save, it might make sense to buy sooner with a smaller deposit. If rates are high and you’re not in a rush, waiting and saving more could put you in a stronger position later.

At HLC Mortgages, we’ll help you explore both options so you can make a decision that’s right for you—not just now, but long term too.

Final thoughts

The amount of deposit you need for a mortgage depends on the type of home you’re buying, your financial situation, and the type of deal you want. But you don’t have to figure it all out on your own.

At HLC Mortgages, we specialise in friendly, jargon-free mortgage advice, tailored to your circumstances. Whether you’ve saved a big deposit or just getting started, we’ll help you understand your options, find the most suitable deal, and move one step closer to owning your dream home.